House to vote on $50 billion econ stimulus plan

By Richard Cowan and Kevin Drawbaugh

WASHINGTON (Reuters) - With financial markets reeling from a weekend of stunning changes on Wall Street, Democrats in the House of Representatives pushed on Monday to aid the faltering economy with a new stimulus package.

Legislation to inject another $50 billion into the economy, mostly by helping finance local construction projects that would create new jobs, was likely to come to a vote this month, a senior House Democratic aide said.

"Jobs, jobs, jobs. That's what it's about," said the aide, adding the bulk of the stimulus would focus on job creation.

But White House spokeswoman Dana Perino said she knew of no shift in President George W. Bush's opposition to a second stimulus bill. "No, I don't know of any change," she told reporters, while also questioning whether construction spending would actually create jobs over the short-term.

If it were to advance, the $50 billion would add to a $168-billion economic stimulus enacted earlier this year, mostly in the form of tax rebate checks already issued.

The second stimulus program would also supplement other steps expected from the federal government in days ahead to boost the flagging economy and calm financial markets.

With unemployment rising to a five-year high of 6.1 percent, and with the bankruptcy filing of Lehman Brothers Holdings Inc., Democrats in Congress want another election-year stimulus -- with or without the support of Bush, who gave his blessing to the first measure.

That first stimulus jolt contributed to preliminary estimates of solid second-quarter economic growth of 3.3 percent.

Shaken by Lehman's downfall and the planned acquisition of rival Merrill Lynch by Bank of America, markets on Monday were jittery over fears of possible related losses at global insurer American International Group.

WALL STREET DECLINE

Stocks fell sharply on Monday, with the Dow Jones industrial average down some 3.6 percent in late afternoon trading, while short-term interest rates soared worldwide, reflecting anxiety among banks about lending to each other.

While details were still in the works, a second stimulus bill also would help low-income families pay winter heating bills and extend unemployment benefits for those exhausting existing aid. States, which face higher costs of providing health care for the poor, also would get more help from Washington, according to several congressional aides.

Without a further extension of aid, nearly 800,000 workers will exhaust their unemployment benefits by early October, according to the National Employment Law Project.

Democratic Sen. Carl Levin, whose home state of Michigan suffers the highest joblessness in the United States, told reporters that an economic stimulus plan he wants the Senate to pass is "in the ballpark" of $50 billion.

Michigan is a key state for Democratic presidential candidate Barack Obama and Republican opponent John McCain.